Sovereign gold bond sales hit record ₹4,600 cr in Jun

livemint.com:

MUMBAI : Amid last month’s stock market breakout, Indians purchased the largest quantity of sovereign gold bonds (SGBs) at 7.77 tonnes worth a whopping ₹4,604 crore in the first series of this fiscal year, underscoring the preference for an asset that acts as a hedge against inflation and a safe-haven asset at times of global uncertainty. The SGB scheme, run by the Reserve Bank of India (RBI) on behalf of the government, has seen an average subscription of 1.72 tonnes across 64 series in the seven years and seven months since its introduction as an alternative to physical gold in 2015.

Last month’s purchases at ₹5,926 per gramme, the highest issue price since the inception of SGBs, imply an increase of almost 10% from the December 2022 series, which had an issue price of ₹5,409 per gramme. SGB prices exclude the 3% goods and services tax (GST) on gold.

Against this, the stock market benchmark index Nifty has generated a 6% return in the year through June at 19,189.5 points. In 2022 also, gold had outperformed equities, becoming the top financial asset class with a return of 13% between an issue price of ₹4,791 per gramme in December 2021 to ₹5,409 in December 2022.

The Nifty, in comparison, gave a return of just 4.3% last year through 18,105 points. “Gold was the best-performing asset last year, and this year, too, has generated market-beating returns amid the persistence of high inflation globally and the Ukraine war," said Shekhar Bhandari, the president of global transaction banking at Kotak Mahindra Bank.